Hi Derek,
You're welcome-we are happy to help!
Yes, it is acceptable to report Form 1099-MISC as an investment sale for free stock in some cases.
Your cash in lieu can use this method to report your $8.78 sale, $5.15 basis and $3.63 gain.
- To confirm the $5.15 cost basis, calculate the cash in lieu cost basis as the dollar amount of the basis for all shares received including the fractional share owned in Sprint before the merger to T-Mobile when you were paid Cash in Lieu. Take this per share basis and multiply that per share by the fraction of a share being reported.
For the amount received on Form 1099-MISC, to avoid the self-employment and business related questions, report it in the Less Common Income/Other Reportable Income section by following these steps. Since it was received in 2020, it is reported as income. This will create cost basis for next year when it was sold.:
- From the left menu, select Federal.
- At Wages & Income, scroll all the way down to Less Common Income and click Show More.
- Select the last listed option for Miscellaneous Income 1099-A, 1099-C, click Start.
- Next, select the last listed option Other Reportable Income.
- Did you receive any other taxable income? click Yes.
- Other Taxable Income: Enter your description including Webull, and Form 1099-MISC as received, the amount and click Continue and Done.
- Disregard the comment "Do not enter income from Form 1099-MISC here" because this is meant to guide taxpayers reporting typical 1099-MISC income. Your case is less common and this is how to report it in TurboTax.
When reporting the sale in 2021, use the amount reported in 2020 as income as your cost basis.
@TaxLess24
